North Carolina § 25-9-518 - Claim concerning inaccurate or wrongfully filed record.

§ 25-9-518. Claim concerning inaccurate or wrongfully filed record.

Statement With Respect to Record Indexed Under Person's Name. - A person may file in the filing office an information statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed. Contents of Statement Under Subsection (a). - An information statement under subsection (a) of this section must: Identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates; Indicate that it is an information statement; and Provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed. An information statement that is subject to the provisions of subsection (b1) of this section shall include a written certification, under oath, by the person that the contents of the information statement are true and accurate to the best of the person's knowledge. In the case of an information statement alleging that a previously filed record was wrongfully filed and that it should have been rejected under G.S. 25-9-516(b)(8), the Secretary of State shall, without undue delay, determine whether the contested record was wrongfully filed and should have been rejected. In order to determine whether the record was wrongfully filed, the Secretary of State may require the person filing the information statement and the secured party to provide any additional relevant information requested by the Secretary of State, including an original or a copy of any security agreement that is related to the record. If the Secretary of State finds that the record was wrongfully filed and should have been rejected under G.S. 25-9-516(b)(8), the Secretary of State shall cancel the record and it shall be void and of no effect. Statement by Secured Party of Record. - A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so under G.S. 25-9-509(d). Contents of Statement Under Subsection (b2). - An information statement under subsection (b2) of this section must: Identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates; Indicate that it is an information statement; and Provide the basis for the person's belief that the person that filed the record was not entitled to do so under G.S. 25-9-509(d). Record not affected by information statement. - The filing of an information statement does not affect the effectiveness of an initial financing statement or other filed record. History (2000-169, s. 1; 2001-231, ss. 2, 3; 2012-70, s. 15.) AMENDED OFFICIAL COMMENT (2010 EDITION) 1. Source. New. 2. Information Statements. Former article 9 did not afford a nonjudicial means for a debtor to indicate that a financing statement or other record was inaccurate or wrongfully filed. Subsection (a) affords the debtor the right to file an information statement. Among other requirements, the information statement must provide the basis for the debtor's belief that the public record should be corrected. See subsection (b). These provisions, which resemble the analogous remedy in the Fair Credit Reporting Act, 15 U.S.C. section 1681i, afford an aggrieved person the opportunity to state its position on the public record. They do not permit an aggrieved person to change the legal effect of the public record. Thus, although a filed information statement becomes part of the "financing statement," as defined in section 9-102, the filing does not affect the effectiveness of the initial financing statement or any other filed record. See subsection (e). Sometimes a person files a termination statement or other record relating to a filed financing statement without being entitled to do so. A secured party of record with respect to the financing statement who believes that such a record has been filed may, but need not, file an information statement indicating that the person that filed the record was not entitled to do so. See subsection (c). An information statement has no legal effect. Its sole purpose is to provide some limited public notice that the efficacy of a filed record is disputed. If the person that filed the record was not entitled to do so, the filed record is ineffective, regardless of whether the secured party of record files an information statement. Likewise, if the person that filed the record was entitled to do so, the filed record is effective, even if the secured party of record files an information statement. See section 9-510(a), 9-518(e). Because an information statement filed under subsection (c) has no legal effect, a secured party of record-even one who is aware of the unauthorized filing of a record-has no duty to file one. Just as searchers bear the burden of determining whether the filing of initial financing statement was authorized, searchers bear the burden of determining whether the filing of every subsequent record was authorized. Inasmuch as the filing of an information statement has no legal effect, this section does not provide a mechanism by which a secured party can correct an error that it discovers in its own financing statement. This section does not displace other provisions of this article that impose liability for making unauthorized filings or failing to file or send a termination statement (see section 9-625(e)), nor does it displace any available judicial remedies. 3. Resort to Other Law. This article cannot provide a satisfactory or complete solution to problems caused by misuse of the public records. The problem of "bogus" filings is not limited to the UCC filing system but extends to the real property records, as well. A summary judicial procedure for correcting the public record and criminal penalties for those who misuse the filing and recording systems are likely to be more effective and put less strain on the filing system than provisions authorizing or requiring action by filing and recording offices. NORTH CAROLINA COMMENT Subsection (b) is Alternative A of the uniform text. Subdivision (b)(3) is modified by adding the last sentence. Subsection (b1) has no counterpart in the uniform text. SUPPLEMENTAL NORTH CAROLINA COMMENT (2012) Subsections (b) and (b3) reflect Alternative A of the amendments to Section 9-518 that were approved by the American Law Institute and the Uniform Law Commission in 2010, except that subsection (d) in the Uniform Act was renumbered as subsection (b3) of this section. Cross References. - As to filing false lien or encumbrance, see G.S. 14-118.6 . As to filing false security agreements, see G.S. 14-401.19 . Transition Provisions. - For transition provisions related to the 2010 amendments to Article 9 by Session Laws 2012-70, see the Appendix following Part 7 at the end of this Article. Session Laws 2012-70, s. 26(a), (b), provides: "(a) Pre-Effective-Date Transactions or Liens. - Except as otherwise provided in Part II of this act, this act applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before this act becomes effective [July 1, 2013]. "(b) Pre-Effective-Date Proceedings. - This act does not affect an action, case, or proceeding commenced before this act becomes effective [July 1, 2013]." Editor's Note. - Session Laws 2012-70, s. 27, provides: "The Revisor of Statutes shall cause to be printed, as annotations to the published General Statutes, all relevant portions of the Official Comments to the 2010 Amendments to Article 9 of the Uniform Commercial Code and all explanatory comments of the drafters of this act as the Revisor may deem appropriate." The Revision of Uniform Commercial Code Article 9 - Secured Transactions was drafted by the National Conference of Commissioners on Uniform State Laws and The American Law Institute on April 27, 2011. The Official Commentary for the 2010 revision are copyrighted 2010 by The American Law Institute and National Conference of Commissioners on Uniform State Laws. The affected portions of the Official Comment to this section have been set out at this section with the appropriate amendments. Effect of Amendments. - Session Laws 2012-70, s. 15, effective July 1, 2013, in subsection (a), rewrote the subsection catchline, which formerly read "Correction statement"; in subsection (b), rewrote the subsection catchline, which formerly read "Sufficiency of correction statement"; added subsections (b2) and (b3); and substituted "an information statement" or a variant thereof for "a correction statement" or a variant thereof throughout the section. See note for Transition Provisions governing these amendments. SUBPART 2. Duties and Operation of Filing Office.